Canada: Recommended Changes To Ontario's Construction Lien Act: Work In Progress

On September 26, 2016, the Ministry of the Attorney General (MAG) released its report: "Striking the Balance: Expert Review of Ontario's Construction Lien Act" (the Report). The Report's review process, which included consultation with over 60 stakeholder groups, began in February 2015 arising out of the previously proposed prompt payment legislation (Bill 69), and involved a review of the effectiveness of the Construction Lien Act (CLA), specifically assessing: (1) whether the statute's policy objectives, drafted in 1983, required revitalization and modernization; (2) the effectiveness of the current payment structures under the CLA; and (3) the adequacy of the existing dispute resolution process under the CLA.

The Report strongly supports maintaining the lien/holdback regime of the CLA as a protectionist measure for construction industry participants. Significantly, the Report also recommends the establishment of a new statute to address matters beyond construction liens and trusts, with the suggested title the "Construction Act: An Act respecting Security of Payment and Efficient Dispute Resolution in the Construction Industry." Of the 100 recommendations identified in the Report (conveniently collected and summarized in Chapter 13), highlights of the Report include:

Preservation, Perfection and Expiry of Liens

  • The time period for the preservation of a lien under section 31 of the CLA would be extended from 45 to 60 calendar days.
  • Termination of a contract would be added as a trigger for the expiry of lien rights and a mandatory form of Notice of Termination or Abandonment would be required to be published to trigger the commencement of the time limit for the preservation of liens under the CLA.
  • The time period for the perfection of a lien would be extended from 45 to 90 days from the last day upon which the lien could have been preserved (i.e., 90 days after the 60th day).
  • The common elements in condominium buildings would be required to have a single PIN to which liens could attach, and the interests of all unit owners would be subject to this lien.
  • Condominium unit owners would be able to post security proportionate to their unit share of a lien, to have the lien vacated.
  • For improvements to leasehold properties, where a landlord funds the improvement though a cash allowance or otherwise requires the improvement, liens would attach to the interests of both the tenant named in the lease and the landlord. However, a landlord's liability in those circumstances would be limited to an amount equal to any deficiency in the holdback (similar to the treatment of mortgagees under the CLA).

Holdback and Substantial Performance

  • The release of holdback under the CLA would become mandatory, subject to any preserved liens and an owner's right of set-off under the CLA, but specifically excluding an owner's right of set-off for debts, claims and damages in relation to other contracts (section 17(3) of the CLA currently permits set-off for debts unrelated to the improvement).
  • If an owner intends to claim set-off in relation to the contract that is the subject of a lien, it would be required to publish a notice of non-payment/ set-off.
  • Partial release of holdback would be allowed on either a phased or annual basis if provided for in the construction contract.

What is Lienable?

  • The definition of "improvement" would be amended to include any capital repair to land and any IT services, materials, equipment and software.

Summary Procedure for Lien Actions

  • Construction lien actions would be case managed in all regions of Ontario.
  • Leave of the court would not be required to bring interlocutory motions within a lien action, to conduct oral examinations for discovery and examinations of documents, or to commence third party claims.
  • Joinder of lien claims and trust claims would be allowed.
  • Lien claims under $25,000.00, would be referred to the Small Claims Court (although certain relief would necessarily remain beyond the jurisdiction of that court, such as declaratory relief) and lien claims between $25,000.00 and $100,000.00 would be dealt with by a simplified procedure with limited examinations for discovery and a summary trial procedure.

Construction Trusts

  • A trustee under the CLA would be required to follow specific statutory requirements in relation to trust fund bookkeeping similar to that applied in the New York Lien Law.

Prompt Payment

  • The Report recommends the creation of a prompt payment regime to be applied to both the public and private sectors that would include, inter alia:

    • The requirement that payments be made, as between an owner and contractor, within 28 days of the owner's receipt of the contractor's invoice, and as between a contractor and a subcontractor, within a further 7 days from the contractor's receipt of payment from the owner, subject to any agreement the parties have made to the contrary;
    • Mandatory non-waivable interest for overdue payments at either the Courts of Justice Act or contract rates.


  • Adjudication would be implemented as a targeted interim binding dispute resolution method available as a right to parties to construction contracts and subcontracts in both the public and private sectors.
  • The parties would have two (2) business days after delivering a Notice of Adjudication to agree on an adjudicator, failing which either party could request that an adjudicator be appointed within five (5) business days.
  • Within thirty (30) calendar days, the adjudicator would be required to set and execute his/her process for the adjudication, including addressing evidence, experts, submissions, inspection of the work, and directions, with reasons to be provided in a written decision.
  • The decision of the adjudicator would be binding on an interim basis, enforced if necessary, through an Application to the Ontario Superior Court of Justice.

Other Technical Amendments

  • The amount of security to be posted to vacate a lien under the CLA would be increased to include the total of the full amount claimed as owing in the claim for lien and the lesser of 25% or $250,000.00 of the amount of the lien, as security for costs.
  • When a mortgagee makes a loan for the purpose of financing both land acquisition and the construction of an improvement, the mortgagee would be required to identify in the mortgage documents the amount intended for the acquisition of land and the amount intended for the improvement.
  • All public sector projects would be required to be surety bonded (regardless of size, since no monetary threshold for contracts has been proposed).

If adopted, the recommendations outlined in the Report will have significant and far reaching ramifications for all participants in the construction industry. While some of the recommended changes aim to create a more efficient and less costly dispute resolution procedure for construction project disputes, through the proposed adjudication process, jurisdiction of the Small Claims Court for minor disputes, and application of the Simplified Rules for disputes valued at less than $100,000, other recommended changes could have the effect of delaying and increasing the costs of larger lien claims as a result of the enhanced rights of discovery, the unfettered right to bring interlocutory motions, the joinder of trust claims with lien claims, the new requirements for the handling of trust funds, the increased amount required to post for security for costs when vacating liens, and the mandatory requirement to obtain surety bonds on public projects. In addition, these recommended changes to the CLA could create greater and/or new legal liability for landlords and new obligations on mortgagees providing purchase and construction loans, and the longer preservation deadline will also extend the period before which statutory holdback on a project is released.

The Government is currently undertaking meetings with some stakeholder groups, seeking feedback on the recommendations in the Report, but is not expected to pursue other formal consultation before determining the steps it will take with the Report's recommendations.

A full version of the Report can be viewed here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions